In Part 1 of this series, we examined the first five KellyOCG guidelines to determine whether a worker is an independent contractor (IC) or an employee. In this article, we’ll look at the last five (IC)ommandments to help ICs and companies avoid misclassification.

6. Thou Shalt Get the Background on Background Checks

A common concern among companies is whether it’s wise to perform background checks on ICs. What’s key here is to mitigate risk while still distinguishing between employees and ICs. One way to go about this is to have a separate company policy for background checking ICs — one that does not follow the same procedures as the policy for employees. Another option is to place the onus on the IC, allowing it to select the screening company and handle all associated costs.

7. Though Shalt Consider Location, Location, Location

Companies often want to know if they can require ICs to work onsite without misclassifying them. The question to ask here is, “Why does the company require the worker to be onsite?” If there are no viable reasons other than to allow the company to exert a certain control over the worker, then an auditor is likely to classify that worker as an employee. Of course, there may be reasons for the work to be performed onsite, such as in the case of a consultant providing workshops or trainings. One thing to keep in mind, though, in cases that aren’t as clear cut, is that if an IC works onsite, there should be a clear delineation between what the IC can do and what employees can do. For example, allowing the IC to make use of the company gym or store discount could easily lead to the relationship being classified as an employer-employee one.

8. Though Shalt Give Up Control (Both Behaviorally and Financially)

Control is a key factor in worker classification. Companies that demand their ICs comply with strict regulations such as who specifically does the work, where they work, when they work and what other companies they work with are likely to be considered exerting the same control an employer would. In general, an IC should be in control of how, when, where and with whom it completes the work.

9. Thou Shalt Lawyer Up

The best way to ensure an IC is correctly classified is for both parties to seek legal counsel. Then they can work together to establish the parameters of the engagement while making sure there’s no risk of misclassification.

10. Thou Shalt Have No Other Auditors Before Them

Understanding the risks and consequences of misclassification is critical for companies. Note that the IRS and the Department of Labor (DOL) now have a memorandum of understanding that allows them to share information. The DOL also has a similar MoU with 25 states — and that list is growing. In short, companies are best advised to do everything in their power to avoid misclassification of workers. These 10 (IC)ommandments should be a good place to start.